What Determines Foreign Direct Investment In Developing Countries?: A Panel Data Analysis (original) (raw)
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Determinants of Foreign Direct Investment in Developing Countries : A Comparative Analysis
By bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play an important role in achieving rapid economic growth in developing countries. Developing countries have not been considered as favourable destinations for FDI as developed countries. Moreover, among the developing countries a few, such as China, India, Nigeria and Sudan, are the major recipients of FDI, with the rest vying for the scraps. Using panel data from 68 low-income and lower-middle income developing countries, this article strives to identify the factors that determine FDI infl ow to developing countries. Based on a comparative discussion focussing on why some countries are successful in attracting FDI, the article demonstrates that countries with larger GDPs, higher GDP growth rates, higher proportion of international trade and a more business-friendly environment are more successful in attracting FDI.
The Determinants of Foreign Direct Investment In Developing Countries
Anais do XXXII Encontro …, 2004
The objective of this study is to shed light on the determinants of foreign direct investiment (FDI) in developing countries. In order to undertake it, we performe a econometric model based in panel data analysis for 38 developing countries (including transition economies) for the ...
Contributions to Political Economy, 2010
and management know-how from developed countries, foreign direct investment (FDI) can play an important role in achieving rapid economic growth in developing countries. The fact is that developing countries have not been considered as favorable destinations for FDI, as FDI mostly goes to developed countries. Moreover, among the developing countries, a few countries, such as China, India, Nigeria and Sudan are the major FDI recipient countries. The rest of the developing countries are simply fighting for the scraps. Using panel data from 68 low-income and lower-middle income developing countries, this paper strives to identify the factors that determine FDI inflow to the developing countries. Based on a comparative discussion focusing on why some countries are successful in attracting FDI while others are not, the paper demonstrates that countries with larger GDP and high GDP growth rate, higher proportion of international trade and with more business friendly environment are more successful in attracting FDI.
Journal Article, 2020
This study aims to identify the key determinants of FDI in developing nations with a sample of 25 developing countries from three different regions of the world for the period of 2000 to 2017. By employingdynamic panel data multiple regression models for each region with the GMM estimations, we find that market potential and market size significantly determine the FDI. Therefore, ween courage developing nations to stimulate the market seeking determinants of FDI to achieve their sustainable economic growth. Moreover, DBI is not a significant determinant of FDI. Thus, policymakers should rethink considering the DBI as a means to attract FDI. We also argue that different regions have different stimuli to attract FDI into their regions as Africa has trade openness, Latin America has capital intensive platforms and Asia has market size.
Optimum: Jurnal Ekonomi dan Pembangunan
Foreign Direct Investment (FDI) is recognized as a major force that integrates developing countries into the world economy and is expected to be a key factor in driving sustainable and balanced economic growth. Emerging Market Asia countries are the host countries that receive the highest inflows of Foreign Direct Investment (FDI) compared to other emerging market countries. Even in crisis conditions, emerging market countries, especially the Asian region, are still the destination for investment because of their resilience to crisis shocks. In analyzing the determinants of Foreign Direct Investment (FDI), the variables used are Market Size, Trade Openness, Interest Rates, Control of Corruption, Education Levels and Telecommunication Infrastructure. The analytical method used is the Fixed Effect Model (FEM) Data Panel. The results of the study show that market size, corruption control and telecommunications infrastructure have a positive and significant effect on foreign direct inve...
WSEAS transactions on environment and development, 2022
Foreign Direct Investment plays an important role in a country's economic activity because of its positive effect on economic growth. In developing or transition countries foreign capital is considered one of the most important sources of economic growth, helping in creating new jobs and influencing technological innovation. Many governments design and implement strategies to attract Foreign Direct Investment over time. Therefore, determining the role of Foreign Direct Investment in different economies has become an important issue for designing policy responses. This paper aims to determine through empirical analysis, the determinants of Foreign Direct Investment flows in developing and developed countries and make policy recommendations for the promotion of Foreign Direct Investment in these countries. Based on the selected data period collected by the World Bank repository, we applied pooled regression models and panel data analyses to determine the factors influencing FDIs. Applying the fixed effect model and the random one, we identified the important factors impacting the FDI for developing and developed countries. Based on the results obtained by applying the random-effects model, among effective factors on Foreign Direct Investment inflows, we could mention Gross Domestic Product (GDP) growth, Official Development Assistance, Trade, inflation, regulatory quality, government effectiveness, political stability, and population. From all these factors, only inflation tends to decrease the Foreign Direct Investment inflows in a hosting country, and hence, governments in developing countries must give more attention to these factors.
JOURNAL OF ECONOMIC DEVELOPMENT, 2010
The paper is concerned with the analysis of the main determinants of foreign direct investment in MENA countries. The estimation is run on the determinants of FDI in our sample which consist of 36 countries. 12 of these countries were in MENA countries and another 24 were the major recipients of FDI in their respective regions in developing countries. By employing a panel data methodology the study investigates whether the determinants of FDI are similar to the other FDI receiving developing countries. The study reveals that the key determinants of FDI inflows in MENA countries are the size of the host economy, the government size, natural resources and the institutional variables. The paper concludes that, countries that are receiving fewer foreign investments could make themselves more attractive to potential foreign investors. So, the policy makers in the MENA region should remove all barriers to trade, develop their financial system and build appropriate institutions.
Foreign Direct Investment: Lessons from Panel Data
Foreign direct investment (FDI) has spawned a signi…cant amount of academic research and the literature continues to grow at an impressive rate. The empirical literature has expanded at a rapid pace in many di¤erent directions. However, regardless of the question studied, the nature of the problem itself generally requires using panel data estimation methods because ‡ows (or stocks) of FDI between pairs of countries (or between countryindustry pairs) are analyzed for one or several time periods. The purpose of this paper is to provide a selective survey of the empirical literature on the determinants of FDI based on panel data.